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HomeMy WebLinkAboutOrdinances - ORD-10-1497 - 02/01/2010 - ISSUE SERIES 2010B BONDS $3.510 MILLIONORDINANCE NUMBER ORD-10-1497 AN ORDINANCE providing for the issuance of $3,510,000 Taxable General Obligation Bonds, Series 2010B, of the City of McHenry, McHenry County, Illinois, and providing for the levy and collection of a direct annual tax for the payment of the principal of and interest on said bonds. Adopted by the City Council on the 1 st day of February, 2010. TABLE OF CONTENTS SECTION HEADING PAGE PREAMBLES........................................................................................................................................1 SECTION 1. DEFINITIONS.............................................................................................................2 SECTION 2. INCORPORATION OF PREAMBLES...............................................................................5 SECTION 3. DETERMINATION TO ISSUE BONDS............................................................................5 SECTION4. BOND DETAILS.........................................................................................................5 SECTION 5. EXECUTION; AUTHENTICATION................................................................................6 SECTION 6. REGISTRATION AND EXCHANGE OR TRANSFER OF BONDS; PERSONS TREATED AS OWNERS...............................................................................................7 SECTION7. FORM OF BOND........................................................................................................I I SECTION 8. SECURITY FOR THE BONDS......................................................................................17 SECTION 9. TAX LEVY; ABATEMENT..........................................................................................17 SECTION 10. FILING WITH COUNTY CLERK.................................................................................18 SECTION 11. SALE OF BONDS......................................................................................................18 SECTION 12. CREATION OF FUNDS AND APPROPRIATIONS............................................................19 SECTION 13. ELECTIONS AND DESIGNATIONS CONCERNING THE BONDS....................................20 SECTION 14. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS..............................................22 SECTION 15. NOT PRIVATE ACTIVITY BONDS.............................................................................22 SECTION16. REGISTERED FORM.................................................................................................23 oc SECTION 17. RIGHTS AND DUTIES OF BOND REGISTRAR AND PAYING AGENT ............................23 SECTION 18. DEFEASANCE..........................................................................................................24 SECTION 19. CONTINUING DISCLOSURE UNDERTAKING..............................................................24 SECTION 20. MUNICIPAL BOND INSURANCE.................................................................................25 SECTION 21. SEVERABILITY........................................................................................................25 SECTION22. REPEALER...............................................................................................................26 SECTION 23. EFFECTIVE DATE....................................................................................................27 -11- ORDINANCE NUMBER ORD-10-1497 AN ORDINANCE providing for the issuance of $3,510,000 Taxable General Obligation Bonds, Series 2010B, of the City of McHenry, McHenry County, Illinois, and providing for the levy and collection of a direct annual tax for the payment of the principal of and interest on said bonds. WHEREAS by virtue of its population and pursuant to the provisions of Section 6 of Article VII of the Constitution of the State of Illinois, the City of McHenry, McHenry County, Illinois (the "City"), is a home rule unit and may exercise any power or perform any function pertaining to its government and affairs including, but not limited to, the power to tax and to incur debt; and WHEREAS pursuant to the provisions of said Section 6, the City has the power to incur debt payable from ad valorem property tax receipts or from any other lawful source and maturing within 40 years from the time it is incurred without prior referendum approval; and WHEREAS the City Council of the City (the "Council") has considered the needs of the City and has heretofore determined and does hereby determine that it is advisable, necessary and in the best interests of the City to fund certain capital improvements in the City, including street improvements throughout the City (the "Project"), and WHEREAS the estimated cost to the City of the Project, including costs of issuance for the hereinafter defined Bonds, is the sum of $3,510,000 plus any estimated available amount of interest earnings on said sum prior to its expenditure; and WHEREAS, there are insufficient funds on hand and available to pay the costs of the Project, and it is necessary for that purpose that a sum to pay such costs be borrowed at this time, and in evidence of such indebtedness, general obligation bonds of the City be issued in the principal amount: of $3,510,000, and that such indebtedness be incurred in accordance with the Act as hereinafter defined, and without submitting the question of incurring such indebtedness to the electors of the City for their approval; and WHEREAS the Council does hereby determine that it is advisable and in the best interests of the City to borrow $3,510,000 at this time pursuant to the Act for the purpose of paying the costs of the Project and, in evidence of such borrowing, issue its full faith and credit bonds in the principal amount of $3,510,000; and WHEREAS the City by Ordinance Number ORD-10-1495, adopted by the Council on the 1st day of February, 2010, designated the City as a recovery zone for all purposes of and as provided in the American Recovery and Reinvestment Act of 2009; and WHEREAS the Secretary of the United States Treasury has awarded The County of McHenry, Illinois, (the "County"), an allocation of $18,338,000 for recovery zone economic development bonds (being the "Recovery Zone Economic Development Bond Allocation "); and WHEREAS the County has pursuant to Resolution R-200909-1.2-273, adopted by the County Board of the County on the 15th day of September, 2009, allocated $2,500,000 of its Recovery Zone Economic Development Bond Allocation to the City for the Project; and WHEREAS the Project is wholly located in the City and the City is wholly located in the County, and as such, the County is an ultimate beneficiary of any Recovery Zone Economic Development Bond Allocation allocated to the City; Now THEREFORE Be It Ordained by the City Council of the City of McHenry, McHenry County, Illinois, in the exercise of its home rule powers, as follows: Section 1. Definitions. In addition to such other words and terms used and defined in this Ordinance, the following words and terms used in this Ordinance shall have the following meanings, unless, in either case, the context or use clearly indicates another or different meaning is intended: -2- "Act" means, collectively, the Illinois Municipal Code, as supplemented and amended, the home rule powers of the City under Section 6 of Article VII of the Illinois Constitution of 1970; and, in the event of conflict between the provisions of said code and home rule powers, the home rule powers shall be deemed to supersede the provisions of said code. "Bond" or "Bonds" means one or more, as applicable, of the $3,510,000 Taxable General Obligation Bonds, Series 2010B, authorized to be issued by this Ordinance. "Bond Fund" means the Bond Fund established and defined in Section 12 of this Ordinance. "Bond Re€sister" means the books of the City kept by the Bond Registrar to evidence the registration and transfer of the Bonds. "Bond Registrar" means The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, or a successor thereto or a successor designated as Bond Registrar hereunder. "Build America Payments" means the payments received by the City directly from the Secretary of the U.S. Treasury pursuant to Section 6431 of the Code. 'The amount of each Build America Payment is set in Section 6431 of the Code at 35 percent of the corresponding interest payable on the 201 OB Qualified Build America Bonds. "City" means the City of McHenry, McHenry County, Illinois. "Code " means the Internal Revenue Code of 1986, as amended. "Council" means the City Council of the City. "County Clerk" means the County Clerk of The County of McHenry, Illinois. "Ordinance" means this Ordinance, numbered as set forth on the title page hereof, and passed by the Council on the 1 st day of February, 2010. -3- "Paying Agent" means The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, or a successor thereto or a successor designated as Paying Agent hereunder. "Pledged Taxes " means the taxes levied on the taxable property within the City to pay principal of and interest on the Bonds as provided in Section 9 hereof. "Private Business Use" means any use of any portion of the Project by any person other than a state or local governmental unit, including as a result of (i) ownership, (ii) actual or beneficial use pursuant to a lease or a management, service, incentive payment, research or output contract or (iii) any other similar arrangement, agreement or understanding, whether written or oral, except for use of any portion of the Project on the same basis as the general public. "Private ]Business Use" includes any formal or informal arrangement with any person other than a state or local governmental unit that conveys special legal entitlements to any portion of the Project that is available for use by the general public or that conveys to any person other than a state or local governmental unit any special economic benefit with respect to any portion of the Project that is not available for use by the general public. "Project" means the capital expenditures as described and defined as such in the preambles to this Ordinance. "Recovery Zone Development Payments " means the payments received by the City directly from the Secretary of the U.S. Treasury pursuant to Section 6431 of the Code. The amount of the Recovery Zone Development Payment is set in Section 1400U-2 of the Code at 45 percent of the corresponding interest payment on the 2010B Recovery Zone Bonds. "2010B Recovery Zone Bonds" means the portion of the Bonds maturing in the years 2015 through 2020 and $290,000 principal amount maturing in 2014, designated "Recovery Zone Economic Development Bonds" within the meaning of Section 14OOU-2 of the Code. -4- " 2010B Qualified Build America Bonds " means the portion of the Bonds maturing in the years 2011 through 2013 and $55,000 principal amount maturing in 2014 designated as a "build America bond" and a "qualified bond" within the meaning of Section 54AA(g) of the Code. Section 2. Incorporation of Preambles. The Council hereby finds that all of the recitals contained in the preambles to this Ordinance are true, correct and complete and does incorporate them into this Ordinance by this reference. Section 3. Determination to Issue Bonds. It is necessary and in the best interests of the City to acquire and construct the Project, to pay all related costs and expenses incidental thereto, and to borrow money and issue the Bonds for such purposes. It is hereby found and determined that such borrowing of money is necessary for the welfare of the govennment and affairs of the City, is for a proper public purpose or purposes and is in the public interest, and is authorized pursuant to the Act; and these findings and determinations shall be deemed conclusive. Section 4. Bond Details. For the purpose of providing for such costs, there shall be issued and sold the Bonds in the principal amount of $3,510,000. The Bonds shall be issued in two series and shall be designated "Taxable General Obligation Bonds, Series 2010E ". The Bonds shall be dated the date of issuance thereof (the "Dated Date "); and shall also bear the date of authentication thereof. The Bonds shall be issued and sold in the principal amount of $3,510,000, shall be in fully registered form, shall be in denominations of $5,000 or integral multiples thereof (but no single Bond shall represent principal maturing, on more than one date), shall be numbered consecutively in such fashion as shall be determined by the Bond Registrar, and shall become due and payable serially on December 15 of the years and in the amounts and bearing interest at the rates percent per annum as follows: -5- YEAR AMOUNT ($) RATE (%) 2011 280,000 1.40% 2012 335,000 2.00% 2013 340,000 2.50% 2014 345,000 3.00% 2015 350,000 3.25% 2016 355,000 3.55% 2017 365,000 3.85° o 2018 370,000 4.05% 2019 380,000 4.20% 2020 390,000 4.400,% Each Bond shall bear interest from the later of its Dated Date as herein provided or from the most recent interest payment date to which interest has been paid or duly provided for, until the principal amount of such Bond is paid or duly provided for, such interest (computed upon the basis of a 360-day year of twelve 30-day months) being payable on December 15 and June 15 of each year, commencing on June 15, 2011. Interest on each Bond shall be paid by check or draft of the Paying Agent, payable upon presentation thereof in lawful money of the United States of America, to the person in whose name such Bond is registered at the close of business on the applicable Record Date (the "Record Date"), and mailed to the registered owner of the Bond as shown in the Bond Register or at such other address furnished in writing by such Registered Owner. The Record Date shall be the 1 st day of the month of any interest payment date. The principal of the Bonds shall be payable in lawful money of the United States of America upon presentation thereof at the principal corporate trust office of the Paying Agent, or at successor Paying Agent and locality. Section S. Execution; Authentication. The Bonds shall be executed on behalf of the City by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk, as they may determine, and shall have impressed or imprinted thereon the corporate seal or facsimile thereof of the City. In case any such officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such 0 signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. All Bonds shall have thereon a certificate of authentication, substantially in the form hereinafter set forth, duly executed by the Bond Registrar as authenticating agent of the City and showing the date of authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Ordinance unless and until such certificate of authentication shall have been duly executed by the Bond Registrar by manual signature, and such certificate of authentication upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Ordinance. The certificate of authentication on any Bond shall be deemed to have been executed by it if signed by an authorized officer of the Bond Registrar, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued hereunder. Section 6. Registration and Exchange or Transfer of Bonds; Persons Treated as Owners. (a) General. The City shall cause books for the registration and for the transfer of the Bonds as provided in this Ordinance to be kept at the principal corporate: trust office of the Bond Registrar, which is hereby constituted and appointed the registrar of the City for the Bonds. The City is authorized to prepare, and the Bond Registrar or such other agent as the City may designate shall keep custody of, multiple Bond blanks executed by the City for use in the transfer and exchange of Bonds. Any Bond may be transferred or exchanged, but. only in the manner, subject to the limitations, and upon payment of the charges as set forth in this Ordinance. Upon surrender for transfer or exchange of any Bond at the principal corporate trust office of the Bond Registrar, duly endorsed by or accompanied by a written instrument or instruments of transfer or exchange in form satisfactory to the Bond Registrar and duly executed by the registered owner or an attorney for such owner duly authorized in writing, the City shall execute and the Bond Registrar -7- shall authenticate, date and deliver in the name of the transferee or transferees or, in the case of an exchange, the registered owner, a new fully registered Bond or Bonds of like tenor, of the same maturity, bearing the same interest rate, of authorized denominations, for a like aggregate principal amount. The Bond Registrar shall not be required to transfer or exchange any Bond during the period from the close of business on the Record Date for an interest payment to the opening of business on such interest payment date. The execution by the City of any fully registered Bond shall constitute full and due authorization of such Bond, and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond; provided, however, that the principal arnount of Bonds of each maturity authenticated by the Bond Registrar shall not at any one time exceed the authorized principal amount of Bonds for such maturity less the amount of such Bonds which have been paid. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bond shall be made only to or upon the order of the registered owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds. (b) Global Book -Entry System. The Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities of the Bonds determined as described in Section 4 hereof. Upon initial issuance, the ownership of each such Bond shall be In registered in the Bond Register in the name of Cede & Co., or any successor thereto ( "Cede "), as nominee of The Depository Trust Company, New York, New York, and its successors and assigns ("DTC"). All of the outstanding Bonds shall be registered in the Bond Register in the name of Cede, as nominee of DTC, except as hereinafter provided. The Mayor, City Clerk and Treasurer of the City and the Bond Registrar are each authorized to execute and deliver, on behalf of the City, such letters to or agreements with DTC; as shall be necessary to effectuate such book -entry system (any such letter or agreement being referred to herein as the "Representation Letter"), which Representation Letter may provide for the payment of principal of or interest on the Bonds by wire transfer. With respect to Bonds registered in the Bond Register in the name of Cede, as nominee of DTC, the City and the Bond Registrar shall have no responsibility or obligation to any broker -dealer, bank or other financial institution for which DTC holds Bonds from time to time as securities depository (each such broker -dealer, bank or other financial institution being referred to herein as a "DTC Participant") or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Bond Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a registered owner of a Bond as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any, DTC Participant or any other person, other than a registered owner of a Bond as shown in the Bond Register, of any amount with respect to the principal of or interest on the Bonds. The City and the Bond Registrar may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal ME and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Bond Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the respective registered owners of the Bonds, as shown in the Bond Register, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of a Bond as shown in the Bond Register, shall receive a Bond evidencing the obligation of the City to make payments of principal and interest with respect to any Bond. Upon delivery by DTC to the Bond Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede, and subject to the provisions in Section 4 hereof with respect to the payment of interest to the registered owners of Bonds at the close of business on the 1 st day of the month of the applicable interest payment date, the name "Cede" in this Ordinance shall refer to such new nominee of DTC. In the event that (i) the City determines that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter, (ii) the agreement among the City, the Bond Registrar and DTC evidenced by the Representation Letter shall be terminated for any reason or (iii) the City determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall notify DTC and DTC Participants of the availability through DTC of certificated Bonds and the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede, as nominee of DTC. At that time, the City may determine that the Bonds shall be registered in the name of and deposited with such other depository operating a universal book -entry system, as may be acceptable to the City, or such depository's agent or designee, and if the City does not select -10- such alternate universal book -entry system, then the Bonds may be registered in whatever name or names registered owners of Bonds transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 6(a) hereof. Notwithstanding any other provisions of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede, as nominee of DTC, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the name provided in the Representation Letter. Section 7. Form of Bond. The Bonds shall be in substantially the form hereinafter set forth; provided, however, that if the text of the Bonds is to be printed in its entirety on the front side of the Bonds, then the second paragraph on the front side and the legend "See Reverse Side for Additional Provisions" shall be omitted and the text of paragraphs set forth for the reverse side shall be inserted immediately after the first paragraph. -11- [FORM OF BOND - FRONT SIDE] REGISTERED REGISTERED No. $ UNITED STATES OF AMERICA STATE OF ILLINOIS THE COUNTY OF MCHENRY CITY OF MCHENRY TAXABLE GENERAL OBLIGATION BOND, SERIES 2010E See Reverse Side for Additional Provisions. Interest Maturity Dated Rate: % Date: December 15, Date: February 18, 2010 CUSIP: 581170 Registered Owner: CEDE & CO. Principal Amount: DOLLARS KNOW ALI. PERSONS BY THESE PRESENTS that the City of McHenry, McHenry County, Illinois, a municipality, home rule unit, and political subdivision of the State of Illinois (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns as hereinafter provided, on the Maturity Date identified above, the Principal Amount identified above and to pay interest (computed on the basis of a 360--day year of twelve 30-day months) on such Principal Amount from the later of the Dated Date of this Bond identified above or from the most recent interest payment date to which interest has been paid or duly provided for, at the Interest Rate per annum identified above, such interest to be payable on December 15 and June 15 of each year, commencing June 15, 2011, until said Principal Amount is paid or duly provided for. The principal of this Bond is payable in lawful money of the United States of America upon presentation hereof at the principal corporate trust office of The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, as paying agent (the "Paying Agent"). Payment of interest shall be made to the Registered Owner hereof as shown on the registration books of the City maintained by The Bank of New York Mellon Trust Company, National Association, Chicago, -12- Illinois, as bond registrar (the "Bond Registrar "), at the close of business on the applicable Record Date (the "Record Date "). The Record Date shall be the 1 st day of the month of any interest payment date. Interest shall be paid by check or draft of the Paying Agent, payable upon presentation in lawful money of the United States of America, mailed to the address of such Registered Owner as it appears on such registration books or at such other address furnished in writing by such Registered Owner to the Bond Registrar. Reference is hereby made to the further provisions of this Bond set forth on the reverse hereof, and such further provisions shall for all purposes have the same effect as if set forth at this place. It is hereby certified and recited that all conditions, acts and things required by the Constitution and ]Laws of the State of Illinois to exist or to be done precedent to and in the issuance of this Bond, including the authorizing Act, have existed and have been properly done, happened and been performed in regular and due form and time as required by law; that the indebtedness of the City, represented by the Bonds, and including all other indebtedness of the City, howsoever evidenced or incurred, does not exceed any constitutional or statutory or other lawful limitation; and that provision has been made for the collection of a direct annual tax, in addition to all other taxes, on all of the taxable property in the City sufficient to pay the interest hereon as the same falls due and also to pay and discharge the principal hereof at maturity. This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Bond Registrar. -13- IN WITNESS WHEREOF the City of McHenry, McHenry County, Illinois, by its City Council, has caused this Bond to be executed by the manual or duly authorized facsimile signature of its Mayor and attested by the manual or duly authorized facsimile signature of its City Clerk and its corporate seal or a facsimile thereof to be impressed or reproduced hereon, all as appearing hereon and as of the Dated Date identified above. Mayor, City of McHenry McHenry County, Illinois ATTEST: City Clerk, City of McHenry McHenry County, Illinois [SEAL] Date of Authentication: , 20 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within -mentioned Ordinance and is one of the Taxable General Obligation Bonds, Series 2010B, having a Dated Date of February 18, 2010, of the City of McHenry, McHenry County, Illinois. Bond Registrar and Paying Agent: The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, as Bond Registrar Authorized Officer -14- [FORM OF BOND - REVERSE SIDE] This bond is one of a series of bonds (the "Bonds ") in the aggregate principal amount of $3,510,000 issued by the City for the purpose of paying the costs of the Project and of paying expenses incidental thereto, all as described and defined in the ordinance authorizing the Bonds (the "Ordinance"), pursuant to and in all respects in compliance with the applicable provisions of the Illinois Municipal Code, as supplemented and amended, and as further supplemented and, where necessary, superseded, by the powers of the City as a home rule unit under the provisions of Section 6 of Article VII of the Illinois Constitution of 1970 (such code and powers collectively, being the "Act"), and with the Ordinance, which has been duly passed by the City Council of the City and approved by the Mayor. This Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Ordinance. Upon surrender for transfer or exchange of this Bond at the principal corporate trust office: of the Bond Registrar, duly endorsed by or accompanied by a written instrument or instruments, of transfer or exchange in form satisfactory to the Bond Registrar and duly executed by the Registered Owner or an attorney for such owner duly authorized in writing, the City shall execute; and the Bond Registrar shall authenticate, date and deliver in the name of the transferee or transferees or, in the case of an exchange, the Registered Owner, a new fully registered Bond or Bonds of like tenor, of the same maturity, bearing the same interest rate, of authorized denominations, for a like aggregate principal amount. The Bond Registrar shall not be required to transfer or exchange any Bond during the period from the close of business on the Record Date for an interest payment to the opening of business on such interest payment date. The City, the Bond Registrar and the Paying Agent may deem and treat the Registered Owner hereof as the absolute owner hereof for the purpose of receiving payment of or on -15- account of principal hereof and interest due hereon and for all other purposes, and the City, the Bond Registrar and the Paying Agent shall not be affected by any notice to the contrary. ASSIGNMENT FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto Here insert Social Security Number, Employer Identification Number or other Identifying, Number (Name and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint as attorney to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: The signature to this transfer and assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. -16- Section 8. Security for the Bonds. The Bonds are a general obligation of the City, for which the full faith and credit of the City are hereby irrevocably pledged, and are payable from the levy of taxes on all of the taxable property in the City, without limitation as to rate or amount. Section 9. Tax Levy; Abatement. For the purpose of providing funds required to pay the interest on the Bonds promptly when and as the same falls due, and to pay and discharge the principal thereof at maturity, there is hereby levied upon all of the taxable property within the City, in the years for which any of the Bonds are outstanding, a direct annual tax sufficient for that purpose; and there is hereby levied on all of the taxable property in the City, in addition to all other taxes, the following direct annual taxes (the Pledged Taxes as hereinabove defined): FOR THE YEAR A TAX SUFFICIENT TO PRODUCE THE DOLLAR SUM OF: 2010 $490,979.13 for interest and principal up to and including December 15, 2011 2011 $446,685.00 for interest and principal 2012 $444,985.00 for interest and principal 2013 $441,485.00 for interest and principal 2014 $436,135.00 for interest and principal 2015 $429,760.00 for interest and principal 2016 $427,157.50 for interest and principal 2017 $418,105.00 for interest and principal 2018 $413,120.00 for interest and principal 2019 $407,160.00 for interest and principal The Pledged Taxes and other moneys on deposit in the Bond Fund shall be applied to pay the principal of and interest on the Bonds. Interest or principal coming due at any time when there are insufficient funds on hand from the Pledged Taxes to pay the same shall be paid promptly when due from current funds on hand in advance of the collection of the Pledged Taxes herein levied; and when the Pledged Taxes shall have been collected, reimbursement shall be made to said funds in the amount so advanced. The City covenants and agrees with the purchasers and registered owners of the -17- Bonds that so long as any of the Bonds remain outstanding, the City will take no action or fail to take any action which in any way would adversely affect the ability of the City to levy and collect the foregoing tax levy. The City and its officers will comply with all present and future applicable laws in order to assure that the Pledged Taxes may be levied, extended and collected as provided herein and deposited into the Bond Fund. Whenever other funds from any lawful source are made available for the purpose of paying any principal of or interest on the Bonds so as to enable the abatement of the taxes levied herein for the payment of same, the Council shall, by proper proceedings, direct the deposit of such funds into the Bond Fund and further shall direct the abatement of the taxes by the amount so deposited. A certified copy or other notification of any such proceedings abating taxes may then be filed with the County Clerk in a timely manner to effect such abatement. Section 10. Filing with County Clerk. Promptly, as soon as this Ordinance becomes effective, a copy ]hereof, certified by the City Clerk of the City shall be filed with the County Clerk; and the County Clerk shall in and for each of the years 2010 to 2019, inclusive, ascertain the rate percent required to produce the aggregate tax hereinbefore provided to be levied in each of said years; and the County Clerk shall extend the same for collection on the tax books in connection with other taxes levied in said years in and by the City for general corporate purposes of the City; and in said years such annual tax shall be levied and collected by and for and on behalf of the City in like manner as taxes for general corporate purposes for said years are levied and collected, and in addition to and in excess of all other taxes. Section H. Sale of Bonds. The Bonds hereby authorized shall be executed as in this Ordinance provided as soon after the passage hereof as may be, and thereupon be deposited with the Treasurer, and be by said Treasurer delivered to Morgan Keegan & Company, Inc., Memphis, Tennessee, the purchaser thereof (the "Purchaser"), upon receipt of the purchase price therefor, the same being $3,487,144.71; the contract for the sale of the Bonds heretofore entered into (the `'Purchase Contract") is in all respects ratified, approved and confirmed, it being hereby found and determined that the Bonds have been sold at such price and bear interest at such rates that neither the true interest cost (yield) nor the net interest rate received upon such sale exceed the maximum rate otherwise authorized by Illinois law and that the Purchase Contract is in the best interests of the City and that no person holding any office of the City, either by election or appointment, is in any manner financially interested directly in his own name or indirectly in the name of any other person, association, trust or corporation, in the Purchase Contract. The use by the Purchaser of any Preliminary Official Statement and any final Official Statement relating; to the Bonds (the "Official Statement") is hereby ratified, approved and authorized; the execution and delivery of the Official Statement is hereby authorized; and the officers of the Council are hereby authorized to take any action as may be required on the part of the City to consummate the transactions contemplated by the Purchase Contract, this Ordinance, said Preliminary Official Statement, the Official Statement and the Bonds. Section 12. Creation of Funds and Appropriations. The proceeds derived from the sale of the Bonds shall be used as follows: A. Accrued interest and premium, if any, on the Bonds shall be and is hereby appropriated for the purpose of paying the first interest due on the Bonds, and to such end is hereby ordered to be deposited into the "Taxable General Obligation Bonds, Series 2010B, Bond Fund" (the "Bond Fund"), hereby created which shall be the fund for the pa.�nnent of principal of and interest on the Bonds. In addition -0- of the proceeds of the Bonds is hereby appropriated as capitalized interest on the Bonds and shall be deposited into the Bond Fund. The Pledged Taxes shall either be deposited into the Bond Fund and used solely and only for paying the principal of and interest on the Bonds or be used to reimburse a fund or account from which advances to the Bond Fund may have been made to pay principal of or interest on the Bonds prior to receipt of Pledged 'faxes. Interest income or investment profit earned in the Bond Fund shall be retained in the Bond Fund for -19- payment of the principal of or interest on the Bonds on the interest payment date next after such interest or profit is received or, to the extent lawful and as determined by the Council, transferred to such other fund as may be determined subject, however, to the tax covenants set forth herein. The City hereby pledges, as equal and ratable security for the Bonds, all present and future proceeds of the Pledged Taxes for the sole benefit of the registered owners of the Bonds, subject to the reserved right of the Council to transfer certain interest income or investment profit earned in the Bond Fund to other funds of the City, as described in the preceding sentence. B. The balance of the proceeds of the Bonds shall be set aside in a separate fund, hereby created, and designated as the "2010 Capital Improvement Project Fund" (the "Project Fund"). Money in the Project Fund shall be used to pay all costs of the Project and all costs and expenses incidental or allocable or related thereto, including all costs of issuance of the Bonds. The Council reserves the right, as it becomes necessary from time to time, to revise the list of expenditures hereinabove set forth, to change priorities, to revise cost allocations between expenditures and to substitute projects, in order to meet current needs of the City; subject, however, to the tax covenants set forth herein. Section 13. Elections and Designations Concerning the Bonds. The City hereby makes an irrevocable election to apply (a) Section 54AA of the Code to the Bonds and (b) Subsection 54AA(g) of the Code to the 2010B Recovery Zone Bonds and designates each of the Bonds as a "build America bond" within the meaning of Section 54AA(d) of the Code and the 2010B Qualified Build America Bonds as a "qualified bond" within the meaning of Section 54AA(g) ,of the Code. The City recognizes that as a result of these elections, interest on the Bonds shall be includable in gross income of the owners thereof' for federal income tax purposes and the owners of the Bonds will not be entitled to any tax credits with respect to the Bonds under Section 54AA of the Code. The City also recognizes that it must take certain future actions and omit other future actions in order for the Bonds to remain "build America bonds." The City will only apply for tax credits under Section 6431 of the Code with respect to the Bonds if the City has not taken and does not intend to take any action, and has not omitted to take and does not intend to omit to take, any action or permit the taking or omission of any action within its control (including, without limitation, making or permitting any use of the proceeds of the Bonds or facilities financed therewith) if taking, permitting or omitting to take such action would -20- cause any of the Bonds to be an arbitrage bond or a private activity bond within the meaning of the Code, or would otherwise cause the Bonds to not be "build America bonds" or the 2010B Qualified Build .America Bonds to not be "qualified bonds" within the meaning of Section 54AA(g) of the Code or would cause the 2010B Recovery Zone Bonds to not be "recovery zone economic development bonds" within the meaning of Section 140OU-2 of the Code. The City acknowledges that, in the event of an examination by the Internal Revenue Service of the status of the Bonds, under present rules, the City may be treated as a "taxpayer" in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the: Internal Revenue Service in connection with such an examination. The Council hereby authorizes the officials of the City responsible for issuing the Bonds, the same being the Mayor, Treasurer and Clerk of the City, to make such further covenants and certifications regarding the specific use of the proceeds of the Bonds as approved by the Council and as may be necessary to assure that the use thereof will not cause the Bonds to be arbitrage bonds and to assure that the Bonds will be "build America bonds" to the extent that the City desires such Bonds to be "build America bonds." In connection therewith, the City and the Council further agree: (a) through their officers, to make such further specific covenants, representations as, shall be truthful, and assurances as may be necessary or advisable; (b) to consult with counsel approving the Bonds and to comply with such advice as may be given; (c) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the Bonds; (d) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (e) if deemed necessary or advisable by their officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the City in such compliance. -21- Section 14. Recovery Zone Economic Development Bonds. The City designates the 2010B Recovery Zone Bonds as recovery zone economic development bonds. Except for proceeds to be spent for costs of issuance, 100 percent of the proceeds of the 2010B Recovery Zone Bonds shall be spent for a qualified economic development purpose in the City (as a recovery zone), including expenditures for public infrastructure and construction of public facilities. The City acknowledges that the provisions of Subchapter IV of Chapter 31 of Title 40, United States Code (dealing with Federal wage and labor standards) shall apply to projects financed with the: 2010B Recovery Zone Bonds, and hereby agrees to comply with said provisions. Section 15. Not Private Activity Bonds. None of the Bonds is a "private activity bond" as defined in Section 141(a) of the Code. In support of such conclusion, the City certifies, represents and covenants as follows: A. None of the proceeds of the Bonds, plus investment earnings thereon, will be or was used in any Private Business Use. B. No direct or indirect payments are to be made on any Bond with respect to any Private Business Use. C. None; of the proceeds of the Bonds is to be used, directly or indirectly, to make or finance loans to persons other than a state or local governmental unit. D. No user of the Project other than the City or another governmental unit will use the same on any basis other than the same basis as the general public; and no person other than the City or another governmental unit will be a user of the Project or as a result of (i) ownership or (ii) actual or beneficial use pursuant to a lease, a management or incentive payment contract, or (iii) any other arrangement. -22- E. Any restriction or covenant contained in this Section 15 need not be observed or may be changed if such nonobservance or change will not result in the Bonds failing to be "build America bonds" under Section 54AA(d) of the Code, result in the 2010B Qualified Build America Bonds failing to be "build America bonds" that are "qualified bonds" under Section 54AA(g) of the Code or result in the 2010B Recovery Zone Bonds failing to be "Recovery Zone Economic Development Bonds" under Section 140OU-2 of the Code, and the City receives an opinion of a nationally recognized firm of attorneys experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds to such effect. Section 16. Registered Form. The City agrees that it will not take any action to permit the Bonds to be issued in, or converted into, bearer or coupon form. Section 17. Rights and Duties of Bond Registrar and Paying Agent. If requested by the Bond Registrar or the Paying Agent, or both, any officer of the City is authorized to execute standard forms of agreements between the City and the Bond Registrar or Paying Agent with respect to the obligations and duties of the Bond Registrar or Paying Agent hereunder. In addition to the tenns of such agreements and subject to modification thereby, the Bond Registrar and Paying Agent by acceptance of duties hereunder agree: (a) to act as bond registrar, paying agent, authenticating agent, and transfer agent as provided herein; (b) as to the Bond Registrar, to maintain a list of Bondholders as set forth herein and to furnish such list to the City upon request, but otherwise to keep such list confidential to the extent permitted by law; (c) as to the Bond Registrar, to cancel and/or destroy Bonds which have been paid at maturity or submitted for exchange or transfer; -23- (d) as to the Bond Registrar, to furnish the City at least annually a certificate with respect to Bonds cancelled and/or destroyed; and (e) to furnish the City at least annually an audit confirmation of Bonds paid, Bonds outstanding and payments made with respect to interest on the Bonds. The City Clerk of the City is hereby directed to file a certified copy of this Ordinance with the Bond Registrar and the Paying Agent. Section 18. Defeasance. Any Bond or Bonds which (a) are paid and cancelled, (b) which have matured and for which sufficient sums been deposited with the Paying Agent to pay all principal and interest due thereon, or (c) for which sufficient Defeasance Obligations have been deposited with the Paying Agent or similar institution having trust powers to pay, taking into account investment earnings on such obligations, all principal of and interest on such Bond or Bonds when due at maturity or as called for redemption, pursuant to an irrevocable escrow or trust agreement, shall cease to have any lien on or right to receive or be paid from the Pledged Taxes hereunder and shall no longer have the benefits of any covenant for the registered owners of outstanding Bonds as set forth herein as such relates to lien and security of the outstanding Bonds. All covenants relative to the federal tax status of the interest on Bonds; and payment, registration, transfer, and exchange; are expressly continued for all Bonds whether outstanding Bonds or not. For purposes of this Section, "Defeasance Obligations " means (a) direct and general full faith and credit obligations of the United States Treasury ( "Directs "), (ii) certificates of participation or trust receipts comprised wholly of Directs or (c) other obligations unconditionally guaranteed as to timely payment by the United States Treasury. Section 19. Continuing Disclosure Undertaking. The Mayor or Treasurer of the City are each hereby authorized, empowered, and directed to execute and deliver a Continuing -24- Disclosure Undertaking under Section (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Continuing Disclosure Undertaking"). When the Continuing Disclosure Undertaking is executed and delivered on behalf of the City as herein provided, the Continuing Disclosure Undertaking will be binding upon the City and the officers, employees, and agents of the City; and the officers, employees, and agents of the City are hereby authorized, empowered, and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Continuing Disclosure Undertaking as executed. Notwithstanding any other provision of this Ordinance, the sole remedies for failure to comply with the Continuing Disclosure Undertaking shall be the ability of the beneficial owner of any Bond to seek mandamus or specific performance by court order to cause the City to comply with its obligations under the Continuing Disclosure Undertaking. Section 20. Municipal Bond Insurance. In the event the payment of principal of and interest on the Bonds is insured pursuant to a municipal bond insurance policy (a "Municipal Bond Insurance I'olicy ") issued by a bond insurer (a "Bond Insurer"), and as long as such Municipal Bond Insurance Policy shall be in full force and effect, the City and the Bond Registrar agree to comply with such usual and reasonable provisions regarding presentment and payment of the Bonds, subrogation of the rights of the Bondholders to the Bond Insurer upon payment of the Bonds by the Bond Insurer, amendment hereof, or other terms, as approved by the Mayor of the City on advice of counsel, his or her approval to constitute full and complete acceptance by the City of such terms and provisions under authority of this section. Section 21. Severability. If any section, paragraph, clause or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Ordinance. -25- Section 22. Repealer. All ordinances, resolutions or orders, or parts thereof, in conflict with the provisions of this Ordinance are to the extent of such conflict hereby repealed. -26- Section 23. Effective Date. This Ordinance shall be in full force and effect immediately upon its passage and approval. Voting AYE: Glab, Schaefer, Blake, Wimmer, Peterson, Condon. Voting NAY: None. ABSENT: Santi. ADOPTED: February 1, 2010 Recorded In City Records: February 1, 2010. ATTEST: C' y Cl k, Cit cif Henry cHe Co ty, Illi ois APPROVED: February 1, 2010 ayor, City of McHenry McHenry County, Illinois -27-